Telmex Denied Entry Into Mexico's Pay TV Market

MEXICO CITY -- Regulators here have rejected a petition from dominant telco Telmex to enter Mexico's pay TV market, saying the company has not complied with certain requirements that aim to level the playing field in the telecom sector.

Owned by Carlos Slim, the world's richest man, Telmex controls an estimated 80% of Mexico's fixed telephone lines and 70% of the mobile phone market. Telmex claims it has met a series of government-mandated conditions to qualify for a television license. But Mexico's Communications Secretariat on Friday said Telmex has failed to offer "non-discriminatory" connection fees to rival telecom networks, and as a result consumers are still paying excessive phone rates.

Slim has been attempting to crack the television market for several years, but has been banned because of competition concerns. Telmex handles billing and marketing for satcaster Dish Mexico, however, it is prohibited from participating in Dish as an investor.

Mexico's telcom and media oligarchs have been feuding lately as they encroach on each other's markets. As Telmex appeared to be inching closer to pay TV, networks Televisa and TV Azteca have been ramping up their offerings of bundled video, Internet and phone services.

The conflict heated up earlier this year after Slim pulled advertising for his companies on Televisa and subsequently filed an antitrust complaint against Mexico's television duopoly claiming the networks collude to control ad prices.

Longtime rival networks, Televisa and TV Azteca responded by doing the unthinkable: they formed a partnership for a new high-speed service dubbed Total Play, which offers TV, Internet, fixed line and mobile phone services. Industry observers saw the alliance as an affront to Slim.

The government decision against Telmex primarily benefits Televisa, which has a dominant grip on the pay TV biz under its subsidiaries Cablevision, Cablemas, TVI and satcaster Sky Mexico.

The Communications Secretariat says Telmex can still pursue a TV concession, but it must meet all the requirements set forth by a 2006 convergence agreement.